Our Perspectives

The Addis Ababa Action Agenda: A step forward on financing for development?

21 Jul 2015by
Gail Hurley, Policy Specialist on Development Finance

The need to build capacities in risk preparedness and to ensure that the international community is able to respond to shocks with timely and adequate financial support is acknowledged in the Addis Abeba Action Agenda. Photo: UNDP in Haiti

The Addis Ababa Action Agenda (AAAA) lays out the steps the international community promises to take to fund the world’s new sustainable development agenda – to be agreed in New York in September.

This new document must also chart a path for how we can address the challenges which have emerged – or become more pronounced – since the 2002 Monterrey Consensus (PDF), such as climate change, accelerated environmental degradation and inequality. So did we get our ‘Monterrey Plus’ in Addis Ababa?

As with all international processes, the outcome is stronger in some areas than in others.

On the plus side, there is a commitment to a new ‘social compact’ in which countries commit to set up social protection systems, with national spending targets for essential services like health and education. If countries cannot funds these through domestic resources, the international community pledges to provide international assistance.

Countries also agreed to work together to fund infrastructure for energy, transport, and water and sanitation, as well as step-up investments in agriculture and nutrition. There was also a commitment to establish a ‘facilitation mechanism’ to promote innovation and scientific cooperation, identify technology needs and gaps, and support capacity building on technology.

The special development challenges faced by the Least Developed Countries (LDCs), Landlocked Least Developed Countries and Small Island Developing States (SIDS) are well recognized in the document, although the AAAA falls short of committing any new resources to these countries.

Shocks and volatility are also acknowledged in the document, as is the need to build capacities in risk preparedness at the local and national level, and to ensure that the international community is able to respond with timely and adequate financial support.

And the AAAA underlines that, when we think about which countries need development aid, we need to look beyond income per capita.

A few issues fall somewhere ‘in between’ positive and negative.

On official development aid (ODA) for instance, the EU made a commitment to collectively reach the target of allocating 0.7% of GNI to ODA by 2030. Many developing countries had wanted a shorter timeframe for implementation of this commitment, and wanted the 0.7% target to be an individual, rather than a collective target (i.e. if one EU country exceeds 0.7%, then it means another can fall below but the target will still be met).

Arguably the biggest issue on the table in Addis Ababa was tax. Civil Society Organizations made the creation of an intergovernmental body on tax their rallying call at the conference. This body should make decisions on international tax cooperation, they say. This demand was not met, although there is a commitment to work together to significantly reduce, and ultimately eliminate, illicit financial flows, as well as to strengthen the capacities of developing country tax administrations.

In this spirit, UNDP launched a new programme with the OECD entitled ‘Tax Inspectors Without Borders’ under which tax audit experts will work alongside local officials of developing country tax administrations to build local tax audit capacity.

Finally on debt, while it was recognized that the debt sustainability challenges of some SIDS requires a special and urgent solution, the AAAA did not endorse proposals to create some form of international sovereign debt restructuring mechanism.

In sum, the AAAA outlines a series of measures which, if implemented, will make an important contribution to financing the new sustainable development agenda. It is now time for governments to translate words into action.